What do you do with a $ 69 million piece of art that doesn’t physically exist?
That is the question posed by the Singapore-based investor who calls himself Metakovan, who made headlines last month when he bought American artist Beeple’s digital artwork “Everydays: The First 5000 Days” at Christie’s.
The work is a non-replaceable token (NFT) – a new type of virtual asset whose ownership status and authenticity are verified by blockchain. NFTs have skyrocketed in popularity in 2021, with prices skyrocketing.
Metakovan, real name Vignesh Sundaresan, plans to exhibit the artwork in four virtual world environments. He works with architects to design gallery complexes that the public can access via web browsers or virtual reality technology.
But art is only part of a new economy of blockchain-based virtual worlds where land, buildings, avatars, and even names can be bought and sold as NFTs, often bringing in hundreds of thousands of dollars. Called the metaverse, these environments allow people to wander with friends, visit virtual buildings and attend virtual events.
Metakovan’s plans are an ambitious venture, but he says he is the world’s largest NFT investor. Its collection of NFTs and other crypto assets, the Metapurse fund, is estimated at $ 189 million, according to NonFungible.com, a site that collects sales history data from NFT marketplaces.
“The current Cambrian explosion of NFTs you are seeing is all about acquisition – people want to buy up NFTs and eat as many as possible,” said Anand Venkateswaran, aka Twobadour, who runs the Metapurse fund with Metakovan.
But it’s just the tip of the iceberg. The real explosion will happen when they are able to experience … these NFTs as they were intended. experience in it. “
In what will be one of the biggest names to join the party, video game maker Atari (ATAR.PA) told Reuters it planned to launch its own blockchain-based virtual world and would reveal details soon.
Online environments will become “very, very big,” regardless of swings in the price of bitcoin, said Frederic Chesnais, head of Atari’s blockchain division and the company’s former CEO. NFT real estate could bring in millions of dollars one day, he added.
However, investors caution that while there is a lot of money flowing into NFTs, the market could represent a price bubble, with the risk of big losses as the hype fades. There may also be excellent opportunities for fraudsters in a market where many participants operate under pseudonyms.
For an image of the rise in cryptocurrency sales, click https://graphics.reuters.com/NFTS-WORLDS/dgkplywqmvb/chart.png
LOTS OF VIRTUAL LAND: $ 500K +
The NFT frenzy has increased interest in blockchain-based online environments. The best known are Decentraland, Cryptovoxels, Somnium Space and The Sandbox, where virtual real estate prices are reaching new highs.
Decentraland has sold more than $ 50 million in total, including land, avatars, usernames, and wearables such as virtual outfits. A 41,216 virtual square meter plot of land sold for $ 572,000 on April 11, which was a record high according to the platform.
Another Decentraland lot sold for $ 283,567 on March 21, according to NonFungible.com, while Somnium Space said an estate on its platform raised more than $ 500,000 on March 16.
Metaverse enthusiasts liken the rush to buy virtual land to the battle for domain names in the early days of the Internet. There are currently a few thousand unique land owners on each of the major blockchain-based platforms.
Their theory is that as more people congregate in these environments, parcels in central locations will be in high demand due to the amount of visitor traffic.
“All the virtual land and these virtual spaces are, in fact, real estate that experiences will focus on, on which attention will focus,” said Twobadour.
“That’s where all the attention is and it’s monetized in a million different ways.”
So far it is a relatively small number of people driving up land prices on these worlds.
In Decentraland, there were 334 buyers in March, generating monthly sales volume of more than $ 4 million, according to NonFungible.com, from $ 767,400 in February with 184 buyers and $ 246,134 in January with 111 buyers.
An NFT investor named Whale Shark, whose collection was estimated at more than $ 20 million by NonFungible.com in February, said he spent 200 of the cryptocurrency Ether on land in Cryptovoxels and another 200 in The Sandbox.
Those estates cost about $ 60,000 at the time, but are now worth more than $ 400,000 each, he added, on condition of anonymity.
Some virtual worlds have their own cryptocurrencies: Decentraland’s MANA has skyrocketed by more than 3,500% in the past year, according to Coinbase.
Click https://graphics.reuters.com/NFTS-WORLDS/bdwpkbzzwvm/chart.png for an image on the rise of virtual real estate
ANYONE VIRTUAL FESTIVAL?
Some early virtual land investors who bought early are now selling to companies, said Samuel Hamilton, lead community and events at the Decentraland Foundation.
In anticipation of its plans to open its own blockchain-based world, Atari has licensed a retro arcade within Decentraland and will open a casino, while an area called “Crypto Valley” is home to several crypto companies.
Decentraland organized a virtual fashion exhibition in collaboration with Adidas, where designs such as NFTs were auctioned. It also attracts the interest of musicians who can perform in the space and sell tickets and merchandise like NFTs.
“We will have several well-known global festivals all doing stages, and when we get to that, we expect hundreds of thousands or even millions of people,” said Hamilton.
Last year, American rapper Travis Scott drew an audience of 27.7 million visitors to five concerts within Fortnite, the popular online game from Epic Games.
IS ‘CRYPTO WINTER’ COMING?
Sebastien Borget, co-founder of The Sandbox, described commercial activity within virtual worlds as a new nation forming and said the NFT-based economy would outgrow the real world within a decade.
However, there are many in the fledgling industry who are warning of dangers that lie ahead for investors.
“I expect there will be a crypto winter in the coming months, the whole NFT boom will explode and then all value will absolutely collapse,” said Ben Nolan, founder of the virtual world Cryptovoxels.
“Doing NFTs as an investment or as a way to make money is really unwise.”
However, he does see a future for virtual worlds and NFTs.
“I think most people will use virtual worlds? Probably not, but I think a lot of people will and I think NFTs are a big part of that growth,” he said.
“Actually walking around with someone else in a virtual space and looking at art together is a really fun way to spend time,” he added.
Whale Shark said the vast majority of NFTs were not commercially viable and expects only a small number to show up as winners.
But some investors, such as Australia-based Mateen Soudagar, aka DCL Blogger, have little interest in getting back to real investments.
Soudagar says he has made millions of dollars from cryptocurrency and NFTs, but instead of paying out, he keeps about 75% of his money in crypto assets and thinks many of his colleagues are doing the same. Other than upgrading his laptop, he hasn’t changed his lifestyle.
“If you are a believer in the movement, you think the world will enter this space,” he said. “So if you put it in fiat, you go backwards.”
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